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Material Requirements Planning, Just-in-Time Inventory, and Enterprise Resource Planning l CD-ROM MODULE 4

TRUE/FALSE
M4.1

Material requirements planning (MRP) is designed to manage independent inventory.


ANSWER: FALSE

M4.2

Just-in-time inventory techniques strive to reduce in-process inventory levels.


ANSWER: TRUE

M4.3

A manufacturer of garden tillers would be very much interested in managing its dependent
inventory with a material requirements planning system.
ANSWER: TRUE

M4.4

In the material structure tree of material requirements planning, some items may be both parents
and components.
ANSWER: TRUE

M4.5

An inventory item in a material structure tree is either a parent or a component, but could never
be both a parent and component.
ANSWER: FALSE

M4.6

A net material requirements plan is used to include more than one products inventory
information.
ANSWER: TRUE

M4.7

Lead time is necessary information for a material requirements plan.


ANSWER: TRUE

M4.8

Successful material requirements planning is heavily dependent on accurate information.


ANSWER: TRUE

M4.9

Kanbans are essential to JIT inventory practices.


ANSWER: TRUE

M4.10

As the Kanban inventory system can be composed of only two containers, there need to be few, if
any, rules regarding the container usage.

ANSWER: FALSE
M4.11 One advantage of the Kanban process is the same Kanban card can be used for two or more
different inventory items.
ANSWER: FALSE
M4.12 In developing the overall material requirements plan, we develop net material requirements plans
for each item, and integrate these to get the overall gross materials requirements plan.

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Material Requirements Planning, Just-in-Time Inventory, and Enterprise Resource Planning l CD-ROM MODULE 4

ANSWER: FALSE
M4.13

The terms JIT and dependent inventory are synonymous.


ANSWER: FALSE

M4.14

The gross requirements plan includes on-hand inventory and planned order receipts.
ANSWER: FALSE

M4.15

The gross material requirements plan acts as an overall gross production schedule.
ANSWER: TRUE

M4.16

Unfortunately, MRP cannot handle the problem of having two or more end products contain the
same component.
ANSWER: FALSE

M4.17

The Kanban approach requires that a specified number of items be stored in each inventory
container.
ANSWER: TRUE

M4.18

One way to discover production bottlenecks is to remove Kanban containers and their P-Kanban
from the Kanban system in order to starve the production line.
ANSWER: TRUE

M4.19

The Kanban system is basically a simple, four-step process.


ANSWER: TRUE

M4.20

The net materials requirements plan contains such information as items on hand, order receipt
date, order release date, etc.
ANSWER: TRUE

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Material Requirements Planning, Just-in-Time Inventory, and Enterprise Resource Planning l CD-ROM MODULE 4

*M4.21 A manufacturer of custom furniture would be very much interested in managing its inventory
with a material requirements planning system.
ANSWER: FALSE
*M4.22 When we speak of dependent inventory, we mean the quantity of inventory which is directly
dependent on current orders.
ANSWER: FALSE
*M4.23 The purpose of a material structure tree is to illustrate how the various pieces of inventory fit
together.
ANSWER: FALSE
*M4.24 From the material structure tree we are able to calculate the numbers of each inventory item
required to make a final product.
ANSWER: TRUE
*M4.25 The gross requirements plan provides more information than the net requirements plan.
ANSWER: FALSE
*M4.26 In order to develop a net requirements plan, we must know the lead time for the item.
ANSWER: TRUE
*M4.27 In order to develop a gross requirements plan, we need not know the lead time for the item.
ANSWER: FALSE
*M4.28 A typical Kanban system makes use of a container holding a set number of parts.
ANSWER: TRUE
*M4.29 In a typical Kanban system, no Kanban container will be filled unless it has a Kanban card
accompanying it.
ANSWER: TRUE
*M4.30 ERP systems are notoriously easy to implement.
ANSWER: FALSE

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Material Requirements Planning, Just-in-Time Inventory, and Enterprise Resource Planning l CD-ROM MODULE 4

MULTIPLE CHOICE
M4.31

Which of the following would best represent dependent demand?


(a)
(b)
(c)
(d)
(e)

an appliance store
postage stamp sales
personal computer manufacturer
grocery store
none of the above

ANSWER: c
M4.32

The following is not a benefit of material requirements planning:


(a)
(b)
(c)
(d)
(e)

reduced inventory costs


faster response to market changes and costs
increased customer service and satisfaction
reduced computer downtime
better inventory planning and control

ANSWER: d
M4.33

Material structure trees may have


(a)
(b)
(c)
(d)
(e)

any number of levels.


an equal number of parents and components.
(n1) levels.
(n2) levels.
none of the above

ANSWER: a
M4.34

The material structure tree in a material requirements plan shows the relationship between
(a)
(b)
(c)
(d)
(e)

costs and discounts.


parents and components.
supply and demand.
order quantity and demand.
service level and carrying costs.

ANSWER: b

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Material Requirements Planning, Just-in-Time Inventory, and Enterprise Resource Planning l CD-ROM MODULE 4

M4.35

In material requirements planning, a net material requirements plan includes all the following,
except
(a)
(b)
(c)
(d)
(e)

gross requirements.
on-hand inventory.
planned-order receipts.
a transportation algorithm.
planned-order releases for each item.

ANSWER: d
M4.36

A gross material requirements plan is a


(a)
(b)
(c)
(d)

prime material requirements plan.


material requirements plan that indicates shortages.
time schedule for inventory items when there is no on-hand inventory.
none of the above

ANSWER: c
M4.37

A net material requirements plan compared to a gross material requirements plan includes
(a)
(b)
(c)
(d)
(e)

on-hand inventory.
inventory shortages.
inventory overages.
planned obsolescence.
none of the above

ANSWER: a
The information in Table M4-1 is to be used with questions M4.38M4.41.
Table M4-1
Week
Item X
1
Gross
60
On-Hand
80
Net
0
Order Receipt 0
Order Release 0

Week
2
10
20
0
0
10

Week
3
0
10
0
0
40

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Week
4
20
10
10
10

Week
5
40
0
40
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Material Requirements Planning, Just-in-Time Inventory, and Enterprise Resource Planning l CD-ROM MODULE 4

M4.38

In Table M4-1, the lead time for Item X is ________ weeks.


(a)
(b)
(c)
(d)
(e)

5
4
3
2
1

ANSWER: d
M4.39

In Table M4-1, demand for Item X in Week 3 is


(a)
(b)
(c)
(d)
(e)

0.
10.
20.
40.
none of the above

ANSWER: a
M4.40

In Table M4-1, the initial on-hand inventory


(a)
(b)
(c)
(d)
(e)

is 0.
has not been fully utilized.
is held for safety stock purposes.
exceeded Week 1 demand.
none of the above

ANSWER: d
M4.41

Table M4-1 shows


(a)
(b)
(c)
(d)
(e)

inventory order releases in Week 1.


inventory order releases in Week 2.
inventory order releases in Week 3.
inventory order releases in Weeks 1 and 2.
inventory order releases in Weeks 2 and 3.

ANSWER: e
M4.42

The word Kanban literally means


(a)
(b)
(c)
(d)
(e)

inventory.
control.
container.
card.
none of the above

ANSWER: d
M4.43

The C-Kanban is
(a) sitting in the production area ready for use.

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Material Requirements Planning, Just-in-Time Inventory, and Enterprise Resource Planning l CD-ROM MODULE 4

(b) continuously moving (or conveying) inventory to the appropriate user station.
(c) utilized primarily in the user area.
(d) none of the above
ANSWER: c
M4.44

The P-Kanban is
(a)
(b)
(c)
(d)

sitting in the production area ready for use.


continuously moving (or conveying) inventory to the appropriate user station.
utilized primarily in the user area.
none of the above

ANSWER: a
M4.45

Which of the following is a rule regarding Kanbans?


(a)
(b)
(c)
(d)
(e)

containers are filled to the exact order


containers are filled with the appropriate P card
containers are filled to supply safety stock
all of the above are container rules
none of the above

ANSWER: c
M4.46

Product A is a parent to components B and C. It takes five Bs and three Cs to produce A. How
many As can be produced with 400 Bs on hand?
(a)
(b)
(c)
(d)
(e)

80
50
30
10
none of the above

ANSWER: a
M4.47

Product A is a parent to components B and C. It takes five Bs and three Cs to produce A. If you
have 500 Bs and 250 Cs on-hand, how many As may be produced using only the on-hand
inventory?
(a)
(b)
(c)
(d)
(e)

80
50
30
10
none of the above

ANSWER: e
The information in Table M4-2 is to be used with questions M4.48M4.60.
Table M4-2
A

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Material Requirements Planning, Just-in-Time Inventory, and Enterprise Resource Planning l CD-ROM MODULE 4

E
M4.48

The parent(s) of F and G is(are)


(a)
(b)
(c)
(d)
(d)

A.
B, C, D.
D.
C.
none of the above

ANSWER: C
M4.49

If it is desired to produce 100 As, how many Bs are necessary?


(a)
(b)
(c)
(d)
(e)

0
100
200
400
800

ANSWER: b
M4.50

If it is desired to produce 100 As, how many Cs are necessary?


(a)
(b)
(c)
(d)
(e)

0
100
200
400
800

ANSWER: c

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Material Requirements Planning, Just-in-Time Inventory, and Enterprise Resource Planning l CD-ROM MODULE 4

M4.51

If it is desired to produce 100 As, how many Ds are necessary?


(a)
(b)
(c)
(d)
(e)

0
100
200
400
800

ANSWER: c
M4.52

If it is desired to produce 100 As, how many Es are necessary?


(a)
(b)
(c)
(d)
(e)

0
100
200
400
800

ANSWER: b
M4.53

If it is desired to produce 100 As, how many Fs are necessary?


(a)
(b)
(c)
(d)
(e)

0
100
200
400
800

ANSWER: e
M4.54

If it is desired to produce 100 As, how many Gs are necessary?


(a)
(b)
(c)
(d)
(e)

0
100
200
400
800

ANSWER: c
M4.55

If it is desired to produce 100 As, how many Hs are necessary?


(a)
(b)
(c)
(d)
(e)

0
100
200
400
800

ANSWER: c
M4.56

If it is desired to produce 100 As, how many Is are necessary?


(a) 0

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Material Requirements Planning, Just-in-Time Inventory, and Enterprise Resource Planning l CD-ROM MODULE 4

(b)
(c)
(d)
(e)

100
200
600
none of the above

ANSWER: e
M4.57

If we have 500 units of F in stock, how many As can be produced from this on-hand inventory?
(a)
(b)
(c)
(d)
(e)

52
500
62
72
none of the above

ANSWER: c
M4.58

If we have 600 units of I in stock, how many As can be produced from this on-hand inventory?
(a)
(b)
(c)
(d)
(e)

100
600
200
150
none of the above

ANSWER: d
M4.59

In order to produce one unit of A, we need


(a)
(b)
(c)
(d)
(e)

more units of F than of I.


the same number of units of F as of I.
fewer units of F than of I.
cannot tell from information given
none of the above

ANSWER: a
M4.60

If we change the requirement for C to three units of C for each unit of A, how many units of F
will be required for 100 units of A?
(a)
(b)
(c)
(d)
(e)

800
1200
1000
400
none of the above

ANSWER: b
*M4.61 If product A has a demand of 65 units in week 7, has a three-week lead time, and has 35 units onhand, determine the order releases for weeks 3 and 4.
(a) week 3 = 0, week 4 = 35
(b) week 3 = 35, week 4 = 0
(c) week 3 = 20, week 4 = 15

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Material Requirements Planning, Just-in-Time Inventory, and Enterprise Resource Planning l CD-ROM MODULE 4

(d) week 3 = 30, week 4 = 5


(e) none of the above
ANSWER: a
*M4.62 Product A is a parent to components B, C, and D. It takes three Bs, two Cs, and 5 Ds to produce
A. If you have 300 Bs, 150 Cs, and 450 Ds on-hand, how many As may be produced using only
the on-hand inventory?
(a)
(b)
(c)
(d)
(e)

80
75
90
100
none of the above

ANSWER: b
*M4.63 Product A is a parent to components B, and C, and C is a parent to D. It takes three Bs and two
Cs to produce one unit of A, and it takes 4 units of D to produce one unit of C. If we want to
produce 100 units of A, how many units of D will this require?
(a)
(b)
(c)
(d)
(e)

1000
400
750
800
none of the above.

ANSWER: d
*M4.64 Product A is a parent to components B, and C, and C is a parent to D. It takes three Bs and two
Cs to produce one unit of A, and it takes 4 units of D to produce one unit of C. If we have 600
units of B, 200 units of C, and 200 units of D in stock, how many units can we produce?
(a)
(b)
(c)
(d)
(e)

200
115
150
125
none of the above

ANSWER: d

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Material Requirements Planning, Just-in-Time Inventory, and Enterprise Resource Planning l CD-ROM MODULE 4

Table M4-3
A
B(2)

E(3)

F(3)

H(2)

J(2)

*M4.65 Given the material structure in Table M4-3, if you wish to produce 150 units of A, how many
units of K will you need?
(a)
(b)
(c)
(d)
(e)

700
800
900
150
none of the above

ANSWER: c
*M4.66 Given the material structure in Table M4-3, if you wish to produce 150 units of A, how many
units of H will you need?
(a)
(b)
(c)
(d)
(e)

600
700
800
950
none of the above

ANSWER: a
*M4.67 Given the material structure in Table M4-3, assume that we have the following on-hand
inventory:
Item
B
C
D
E
F
G
H
I
J
K
How many units of A can we produce?
(a) 110

90

On-Hand
150
200
50
125
210
100
160
50
120
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Material Requirements Planning, Just-in-Time Inventory, and Enterprise Resource Planning l CD-ROM MODULE 4

(b)
(c)
(d)
(e)

112
47
25
none of the above

ANSWER: d
*M4.68 Given the material structure in Table M4-3, how many units of G will we need to produce 200
units of C?
(a)
(b)
(c)
(d)
(e)

800
700
600
500
none of the above

ANSWER: a
*M4.69 Given the material structure in Table M4-3, how many units of H will be needed to produce 10
units of D?
(a)
(b)
(c)
(d)
(e)

20
40
5
10
none of the above

ANSWER: e
*M4.70 Given the material structure in Table M4-3, how many units of E can be made if we have 300
units of J?
(a)
(b)
(c)
(d)
(e)

150
300
100
200
none of the above

ANSWER: a

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Material Requirements Planning, Just-in-Time Inventory, and Enterprise Resource Planning l CD-ROM MODULE 4

PROBLEMS
M4.71

If product A is the parent to items D and G, and G is the parent to L, M, and T, draw the material
structure tree.
ANSWER:
A
D

G
L

M4.72

If product B has a demand of 40 units in week 4, has a two-week lead time, and has 20 units onhand, determine the order releases for weeks 1 and 2.
ANSWER: order release week 1 = 0, order release week 2 = 20

M4.73

Item D is a component of parent item C. Item D has a one-week lead time. On-hand inventory of
D is 0. The order release for C is 0, 10, 30 in weeks 1, 2, 3. Determine the order release for D in
weeks 1, 2.
ANSWER: order release in week 1=10, order release in week 2 = 30

M4.74

Item F is a component of parent item E. Item F has a one-week lead time. On-hand inventory of
F is 20. The order release for E is 0, 10, 30 in weeks 1, 2. Determine the order release for F in
weeks 1, 2.
ANSWER: order release in week 1= 0, order release in week 2 = 20

M4.75

If one unit of item A requires one unit of B, three units of C, and one unit of D; item B requires
one unit of F; item C requires one unit of G; and item D requires one unit of H and two units of I,
draw the material structure tree.
ANSWER:

SHORT ANSWER/FILL IN THE BLANK


M4.76

Briefly describe a material requirements plan.

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Material Requirements Planning, Just-in-Time Inventory, and Enterprise Resource Planning l CD-ROM MODULE 4

ANSWER: planning, the ordering, scheduling, and receiving times of inventory for production on
a low cost, timely basis
M4.77

State the primary objective of the JIT inventory process.


ANSWER: reduce in-process inventory

M4.78

Describe a material structure tree.


ANSWER: a diagram by level indicating how many and assembly data required for production

M4.79

What is meant by a C-Kanban?


ANSWER: conveyance Kanban

M4.80

What is meant by a P-Kanban?


ANSWER: production Kanban

M4.81

List four benefits of MRP.


ANSWER:

M4.82

1.
2.
3.
4.
5.
6.

Increased customer service and satisfaction


Reduced inventory costs
Better inventory planning and scheduling
Higher total sales
Faster response to market changes and shifts
Reduced inventory levels without reduced customer service

Explain, briefly, the difference between parents and components.


ANSWER: parents contain components

M4.83

Explain, briefly, the difference between a gross material requirements plan and a net material
requirements plan.
ANSWER: The net materials plan gives the details required to implement the gross materials
requirements plan.

M4.84

Just-in-time inventory implies that __________.


ANSWER: inventory is produced/received just when needed as opposed to being stockpiled

M4.85

In a simple inventory system, the two major questions are ___________, and ___________.
ANSWER: How much to order? When to order?

M4.86

In addition to being a simple, easy-to-implement system, the Kanban system can also be very
effective in ___________ and ___________.
ANSWER: controlling inventory costs, uncovering production bottlenecks

M4.87

Explain, briefly, the difference between JIT and MRP.

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Material Requirements Planning, Just-in-Time Inventory, and Enterprise Resource Planning l CD-ROM MODULE 4

ANSWER: JIT is an overall inventory management plan, MRP is primarily a scheduling and
structuring system to determine when to place orders.
M4.88

MRP does not work well for __________ demand systems.


ANSWER: independent

M4.89

The MRP structure tree indicates the _____ and _____ of the ________ that compose the parent.
ANSWER: identity, quantity, components

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